Intel 2006 Annual Report Download - page 85

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Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 2004, in connection with preparing and filing its 2003 federal tax return and preparing its state tax returns, the
company reduced its 2004 tax provision by $195 million. This reduction in the 2004 tax provision was primarily driven by tax
benefits for export sales and state tax benefits for divestitures that exceeded the amounts originally estimated in connection
with the 2003 provision. Also during 2004, the company reversed previously accrued taxes related primarily to the closing of a
state income tax audit that reduced the tax provision for 2004 by $62 million.
The U.S. Internal Revenue Service (IRS) has formally assessed certain adjustments to the amounts reflected by the company
in its tax returns as a tax benefit for export sales for the years 1999 through 2005. See “Note 19: Contingencies” for a
discussion of these matters.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts for income tax purposes. Significant components of the company’s deferred
tax assets and liabilities at fiscal year-ends were as follows:
74
(In Millions)
2006
2005
Deferred tax assets
Accrued compensation and other benefits
$
284
$
212
Accrued advertising
—
170
Deferred income
217
241
Share
-
based compensation
385
—
Inventory valuation
268
251
Impairment losses on equity investments
89
93
State credits and net operating losses
115
107
Intercompany profit in inventory
133
105
Unremitted earnings of
non
-
U.S.
subsidiaries
54
161
Other, net
272
273
1,817
1,613
Valuation allowance
(87
)
(86
)
Total deferred tax assets
$
1,730
$
1,527
Deferred tax liabilities
Depreciation
$
(530
)
$
(806
)
Accrued advertising
(66
)
—
Unrealized gains on investments
(149
)
(123
)
Other, net
(111
)
(117
)
Total deferred tax liabilities
$
(856
)
$
(1,046
)
Net deferred tax assets
$
874
$
481
Reported as:
Current deferred tax assets
$
997
$
1,149
Current deferred tax liabilities
1
(8
)
—
Non
-
current deferred tax assets
2
150
35
Non
-
current deferred tax liabilities
(265
)
(703
)
Net deferred taxes
$
874
$
481
1
Included in the other accrued liabilities line item on the consolidated balance sheets.
2
Included in the other long
-
term assets line item on the consolidated balance sheets.